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Issued at Premium and Redeemed at Par

Loss on issue...

Question

Loss on issue of debentures is a capital loss and it is to be written-off gradually charged to ___

A

None of these

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B

Either Statement of profit & loss or Securities premium

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C

Securities premium

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D

Statement of profit & loss

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Solution

The correct option is B
Either Statement of profit & loss or Securities premium

Loss on issue of debentures is a capital loss and it is to be written-off gradually charged to either statement of profit and loss or securities premium account.

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Q. Grand Hotels Ltd.issued 30,000, 7% Debentures of ₹ 100 each at a discount of 5% redeemable at a premium of 5% . It decided to write off loss on issue of debentures first from Capital Reserve then from Securities Premium Reserve and balance from Statement of Profit and Loss. It has balances as follows:
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When debentures are issued at premium & redeemed at premium, the loss on issue of debentures account is debited with ___

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